Push or pull? Identifying the OEMs' carbon reduction strategies based on the dynamic evolutionary game approach

Abstract

The Original Equipment Manufacturers (OEMs), serving as the paramount constituents of the manufacturing industry, have emerged as the focus of global economic competition. However, due to their cross-border operations associated with high carbon emissions, the OEMs' carbon reducing is constrained by both their foreign clients and local governments. This study utilizes a tripartite evolutionary game model to examine the complex interactions among OEMs, foreign clients, and the local government regarding the carbon pricing, technology sharing and the accountability mechanism. Evolution process, stability (instability) points, dynamic government policies, as well as carbon trading in different scenarios are also studied. The results show that precise government penalties push OEMs to actively reduce carbon emissions. Insufficient assistance or incentives will pull OEMs towards a negative carbon reduction. The push effect of foreign clients' assistance on OEMs carbon reducing surpasses that of the local government incentives when the carbon price rises. The technology sharing and accountability mechanism present a bidirectional effect that enables both OEMs and foreign clients achieve a win-win outcome in carbon reduction. This study examines the economic trade-off of carbon reduction in the OEM industry, especially under the push-pull pressures exerted by local government and foreign clients from both static and dynamic evolutionary perspectives.